Inflation rises, food prices ease: Data
NEW DELHI: India’s benchmark inflation measure Consumer Price Index (CPI) grew at 6.1% in the month of June. The June inflation numbers are slightly higher than 5.8% figure for March 2020. The National Statistical Office (NSO) has released full inflation statistics after a gap of two months. Because there is no headline CPI number for the months of April and May, it is difficult to infer whether the lockdown and subsequent unlocking of the economy has led to a rise or crash in prices.
To be sure, imputed inflation numbers released for the months of April and May yesterday show that inflation has been declining from May.
Sunday’s data does show some signs of disruption in non-food supply chains due to the lockdown. Core inflation, which is the non-food non-fuel component of CPI, grew at 5% in June, 2020 compared to 3.8% in March 2020. Retail inflation data released by the government after a twomonth gap showed prices in June surged to 6.09%, just above the Reserve Bank’s “tolerance limit” of 4% (+/-2%), while food inflation eased to a nine-month low of 7.87%.
The most important take away from the June numbers is a continuous deceleration in food prices. Food inflation growth in June was 7.9%, a nine-month low. To be sure, different components of the food inflation basket show divergent trends. Perishables show a weakness in prices. Fruit prices went down by 0.7% on a year on year basis. Vegetable price inflation grew at 1.9%, the lowest in fifteen months according to the Centre for Monitoring Indian Economy database. (See Chart 1)
The government’s inflation surveys were disrupted by April and May because of the nationwide lockdown. During the lockdown, officials tasked with monitoring prices collected price data through telephonic surveys at designated markets. This was supplemented by information from personal purchases of field staff, the CSO said in a statement.
On Monday, the statistics office also released “imputed” or inferred inflation data for April and May using a methodology recommended in the “Business Continuity Guidelines” of the Inter-Secretariat Working Group on Price Statistics, a global norm. Based on this, consumer prices rose 7.22% in April. They eased to 6.27% in May, according to the imputed index compiled by CSO.
“As the various pandemic related restrictions were gradually lifted and non-essential activities started resuming operations, NSO (National Statistics Office) collected prices from 1030 urban markets and 998 villages for commodities that were available and transacted during the month of June, 2020. The data collected, however, did not meet the adequacy criteria for generating robust estimates of CPIs at the State-level,” the Central Statistics Office said in its statement.
“Expect inflation to remain elevated in the next months due to excess rains impacting supply of fresh vegetables and fiscal pressure pulling up prices of fuel and intoxicants and higher gold prices,” said Prithviraj Srinivas, chief economist of the Mumbaibased Axis Capital.